1. The Final Rule does not require foreign private issuers to comply in Form 20-F with the same reserves disclosure requirements applicable to domestic issuers. T/F
2. Oil and natural gas are formed when decaying plants and micro-organisms are trapped in layers of sediment and - over the course of millions of years - become buried deep within the earth, where underground heat and pressure turn them into useful hydrocarbons, such as oil and natural gas. T/F
3. The initial amount paid to the mineral rights owner in return for the rights to explore, drill and produce is a Lease Bonus.T/F
4. The periodic depreciation, depletion, and amortization expense charged to the Balance Sheet determined by the "units-of-production" method, for which the percent of total production for the period to total proven reserves at the beginning of the period is applied to the gross total of costs capitalized on the balance sheet. T/F
5. Revenue from the sale of oil and gas produced from a property must be divided among all owners according to the ownership interest. T/F
6. The entity does not have to establish an internal policy for when it defines activities as commencing and completed. T/F
7. Purchase in Fee requires that the purchase price be allocated between the mineral and surface rights acquired. T/F
8. Acquisition costs are costs incurred in acquiring an economic interest in the mineral rights by lease or purchase. T/F
9. G&G Studies are sometimes exchanged for interest in a property. T/F
10. The Successful Efforts method allows a company to capitalize only those expenses associated with successfully locating new oil and natural gas reserves. T/F
11. E & P Companies incurs retirement obligations for certain assets. The fair values of these obligations are recorded as liabilities on a discounted basis, which is typically at the time the assets are installed. T/F
12. Most companies do not have a policy that spells out the types of occurrences that would trigger impairment consideration, such as changes in crude oil prices, the effects of inflation and technology improvements on operating expenses, the outlook for global or regional market supply-and-demand and numerous other matters. T/F
13. Drilling for oil and natural gas is a complex process, but advanced technology has made the job more efficient and productive while providing less impact on the environment. T/F
14. Day-rate contract is a type of drilling contract in which payment is based on the number of days drilled. T/F
15. The SEC final rules define the term "reserves" as the estimated remaining quantities of oil and gas and unrelated substances anticipated to be economically producible, as of a given date, by application of development projects to unknown accumulations. T/F
16. Infill wells are classified as development wells for financial accounting purposes.T/F
17. TDC (Tangible Equipment) is defined as an expenditure incurred in relation to drilling a well that alone does not have a salvage value. T/F
18. One of the more challenging issues in oil and gas revenue accounting is producer imbalances.T/F
19. All of the parties of a joint interest agreement pay for the cost of joint interest audits.T/F
20. Joint interest audits, sometimes known as joint venture audits, ensure operator and non-operator partners that revenue and expenses are passed through correctly and in compliance with the joint operating agreement.T/F
21. The accounting treatment for cost such as delinquent Taxes and Mortgage payments are capitalized or recorded as a receivable depending on collectibility.T/F
22. The Financial Accounting Standards Board (FASB), which is responsible for establishing and governing GAAP, and the Securities and Exchange Commission (SEC), which regulates the financial reporting format and content of publicly-traded companies, are divided over which is the correct method.T/F
23. Today, oil and natural gas companies consider site restoration a noncritical operations activity. Teams of environmental and engineering professionals, and skilled equipment operators handle restoration to bring sites back to original or better condition. T/F
24. In most oil and gas drilling arrangements, a primary operator is responsible for the actual drilling of a site. The primary operator receives the initial profits of the venture and undertakes the initial costs.T/F
25. The successful-efforts method requires entities to group their assets by type: proved or unproved properties T/F
26. The buzz word "dry hole" was originally used in oil exploration to describe a well where no significant reserves of oil were found. This term is now often used to describe any fruitless commercial initiative.T/F
27. The reason for Successful efforts and Full cost types of accounting methods is that people are divided on which method they believe best achieves transparency around a company's earnings and cash flows.T/F
28. Delay rental payments are yearly payments made during the primary term in absence of drilling operations in order to obtain the lease.T/F
29. Under ASC Topic 932, companies can use one of two methods to account for their oil and operations: the successful-efforts method or the full-cost method.T/F
30. When the data indicate a likely site for oil and natural gas reserves, a production well is often drilled.T/F
31. Exploration costs are incurred to discover hydrocarbon resources.T/F
32. Horizontal wells are initially drilled straight down but then are gradually curved until the hole runs parallel to the earth's surface.T/F
33. The distinction between IDC and TDC (Tangible Equipment) drilling cost is for financial reporting purposes vs Tax purpose.T/F
34. Options to lease are capitalized and charged to an account called Property Purchase Suspense.T/F
35. Oil, natural gas and other energy reserves are considered long-lived assets for accounting purposes.T/F
36. Upon initial recognition of a liability for retirement obligations, an entity should capitalize that cost as part of the cost basis of the related long-lived asset and depreciate the asset over its useful life T/F
37. The Full Cost method is more widely used by integrated oil and gas companies but is also used by many smaller upstream-only businesses.T/F
38. Royalty is usually paid on lease use gas T/F
39. G& G cost must be capitalized as incurred regardless of whether they were incurred before or after acquisition of a working interest in the property. T/F
40. When the drilling result in a dry hole an entry is made to transfer the cost from Wells-in-progress to Dry Hole Expense T/F